Stocks fall modestly as China lifts rates

8 Feb 2011 - Stocks fell modestly Tuesday after China's central bank raised interest rates for the second time in just over a month in a bid to dampen high inflation.

In a widely expected move, the People's Bank of China announced Tuesday on its website that the benchmark 1-year deposit rate would rise by a quarter percentage point to 3 percent and the 1-year lending rate would increase by the same amount to 6.06 percent.

"The announcement may cause jitters about the impact tightening will have on Chinese growth but these should not be overplayed," said Mark Williams, senior China economist at Capital Economics. "The latest increases are in line with the gradual policy tightening that has been underway over the last few months and will not do much to slow growth."